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Quality Component Guide
Quality Component Guide
Reducing risk and costs through
the management of quality
Quality management plays a crucial role in your company’s performance and growth. It is a key influencer in winning and retaining customers and essential for optimising performance and controlling costs.
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Quality management plays a crucial role in your company’s performance and growth. It is a key influencer in winning and retaining customers and essential for optimising performance and controlling costs.
Failing to produce products that are ‘right first time’ has many implications on the gross margin performance with the main contributors being:
  • 1. Material usage, replacement of scrapped material
  • 2. Labour productivity, reworking or remaking and overtime
  • 3. Transport, unbudgeted shipping
Our default percentage of 6% for quality is based on our experience and taking into consideration the following:
  • Internal failure costs: associated with defects found in-house before dispatch.
  • External failure costs: associated with defects found by the customer.
  • Inspection costs: incurred to determine the degree of conformance to standards.
  • Prevention costs: incurred to keep failure and inspection costs to a minimum.
Quality Sub-Components
In order to understand the improvement required for your quality process, our assessment enables the senior management team to set aspirational goals and determine the current status of the process. The Quality component contains 6 sub-components which, when examined in detail, reveal the current condition of Quality within the business and the benefits for achieving your aspirational goals. The Quality component of the assessment helps you achieve performance through best practice. The result is a detailed action plan which will improve all aspects of Quality in the business. Here are the 6 sub-components of Quality:
1. External Performance
How the quality systems achieve and improve the standards required by the customer.
A good quality record is essential for customer retention. To achieve zero quality incidents requires commitment at every level of the organisation with a complete understanding of customer requirements and processes that protect them from non-conformance.
2. System of quality
How the quality systems prevent poor quality.
The best system of quality is one that focusses on prevention. Post production inspection that relies on people will allow defects to escape. Focusing on prevention, establishing and continuously improving standard operating procedures (SOPs) plus building quality adherence into product and process design is far more effective.
3. Quality Management System (QMS) Compliance
How responsibility for QMS compliance is reinforced throughout the organisation.
QMS is a formalised collection of business processes focused on consistently meeting customer requirements and enhancing their satisfaction. It is composed of an organisational structure, policies, procedures, processes and resources for quality management. The responsibility for QMS compliance starts at the top of the organisation with its leaders and is delegated and monitored via job roles and responsibilities.
4. Internal Performance
How quality performance is monitored and improved.
Methods of containing quality issues internally may enable you to meet the customers’ quality requirements and expectations but can become a substitute for root cause solutions. Poor internal quality performance has a major impact on the cost of sales and the ability to plan and deliver on time. An organisation wide commitment to monitor and continuously improving quality performance should be an integral element of every individual’s job role and responsibility. The best operations establish quality standards, monitor performance, analyse trends and take improvement action.
5. Internal Audits
How the process for ensuring adherence to quality standards is structured and applied.
To ensure all aspects are compliant with the standards set in the Quality Management System (QMS), a formalised audit process is required. The audit process will include trained auditors, an audit plan and frequency. Audit reports are produced identifying non-compliance, the action required and the prescribed timescale for resolution based on severity and risk. Audit compliance is reviewed by the business leaders.
6. Cost of Quality
How quality costs are calculated and linked to the financial performance of the business.
The financial implications of poor quality are significant and should be considered a key performance measure for your business. There should be a formalised process for calculating and reporting the cost of poor quality. The calculation should include the 3 categories of cost associated with poor quality products or services:
  • 1. Appraisal costs that are incurred when determining the degree of conformance to quality requirements.
  • 2. Internal failure costs which are associated with defects found before dispatch.
  • 3. External failure costs that are related to defects found after the customer receives the product or service.
This information allows an organisation to determine the potential savings to be gained by implementing process improvements and the payback on any investment required to achieve the improvement.